Australian Broker Call *Extra* Edition – May 19, 2021

Daily Market Reports | May 19 2021

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

A2M   BIN   CWY   DOC   DOW   DTC (3)   EHL   GNG   IGO   IPD   MCL   NIC   NXS   OLL   PPS   RMS   RMY   S32 (2)   SBM   SES   SOM   VEA   VHT   WBC  

SES    SECOS GROUP LTD

Paper & Packaging - Overnight Price: $0.24

Canaccord Genuity rates ((SES)) as Buy (1) -

While Secos Group's third quarter result was a touch below Canaccord Genuity's expectations, the quarterly demonstrated 33% group revenue growth on the previous period and 75% growth in bioplastics revenue.

Management flagged fourth quarter 2021 revenue to be in excess of $8m sales, noting that demand across all bioplastics segments remains strong.

Once the production capacity Secos has been investing in at both its Chinese and Malaysian facilities is complete, management believes this allows for $13-15m of sales capacity per quarter. This implies annual sales of $52-$60m p.a. of sales capacity, which compares to Canaccord's FY22 forecast of $47.3m.

Secos noted it continues to assess further capacity expansion opportunities, both brownfield and greenfield.

Cannacord believes Secos remains in a strong position to continue to capitalise on the shift away from single-use plastic with the product, capacity and balance sheet to fund growth. 

If successful, the broker believes the transition from blown film production to cast film production could mark a step-change in sales growth for the bio film division due to vast capacity and efficiency improvements.

Cannacord has tempered estimates for traditional product sales to reflect the miss but has maintained  estimates for Bioplastics given the outlook provided by management. As a result, the broker's FY21-FY23 revenue estimates fall by -3.6%, -1.8% and -1.0% respectively.

Buy rating unchanged with the target decreasing to $0.37 from $0.38

This report was published on April 28, 2021.

Target price is $0.37 Current Price is $0.24 Difference: $0.13
If SES meets the Canaccord Genuity target it will return approximately 54% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.00 cents.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 0.00 cents and EPS of 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.00.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

SOM    SOMNOMED LIMITED

Medical Equipment & Devices - Overnight Price: $2.12

Wilsons rates ((SOM)) as Market Weight (3) -

SomnoMed has delivered $15.7m in revenue during the third quarter despite continued covid-19 impact. Revenue was down -8% quarter-on-quarter but in line with Wilsons' forecast.

With North American revenue down due to continued covid-impact and Europe revenue flat, Asia Pacific was the growth market for the third quarter. Asia Pacific was up 24% on the previous corresponding period. 

Wilsons notes it's forecast of $34.1m for the second half of 2021 appears achievable. SomnoMed has also flagged new R&D projects later this year but is yet to provide details. The broker expects projects to focus on improved treatment adherence and lower cost of care. 

The Market Weight rating and target price of $1.65 are unchanged.

This report was published on April 28, 2021.

Target price is $1.65 Current Price is $2.12 Difference: minus $0.47 (current price is over target).
If SOM meets the Wilsons target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 0.00 cents and EPS of 2.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 73.10.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 0.00 cents and EPS of 3.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 55.79.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

VEA    VIVA ENERGY GROUP LIMITED

Crude Oil - Overnight Price: $2.08

Goldman Sachs rates ((VEA)) as Buy (1) -

While Viva Energy Group's first quarter 2021 operating result was broadly in line with Goldman Sachs' recovery expectation, the broker believes the company remains well positioned to leverage improving cash returns from the continued recovery in demand outlook through 2021 (back towards pre-covid levels).

The broker believes refining subsidies and emerging synergies in Geelong operations, post Altona’s closure, adds to upside linked to the covid recovery and lowers the risk profile of the portfolio over the medium term.

In Goldman Sachs' view a $100m buyback remains likely by the end of the first half 2021.

Buy rating and target price of $2.40 both maintained.

This report was released on April 27, 2021.

Target price is $2.40 Current Price is $2.08 Difference: $0.32
If VEA meets the Goldman Sachs target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $2.22, suggesting upside of 6.7%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 5.60 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 2.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 5.5, implying annual growth of N/A.
Current consensus DPS estimate is 4.7, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 37.8.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 8.40 cents and EPS of 14.00 cents.
At the last closing share price the estimated dividend yield is 4.04%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 11.2, implying annual growth of 103.6%.
Current consensus DPS estimate is 7.3, implying a prospective dividend yield of 3.5%.
Current consensus EPS estimate suggests the PER is 18.6.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

VHT    VOLPARA HEALTH TECHNOLOGIES LIMITED

Medical Equipment & Devices - Overnight Price: $1.25

Bell Potter rates ((VHT)) as Buy (1) -

Bell Potter predicts Volpara Health Technology is set to become the leading provider of innovative tools for the management of breast cancer risk over the next few years.

Volpara Health's technology platform is the only one offering a holistic approach to personalised breast cancer management, states the broker.

The acquisition of CRA Health helped drive annual recurring revenue to US$18.6, observes the broker, adding US$4m in addition to 8.1%, or $US1.1m, organic growth in annual recurring revenue. 

Average revenue per woman for new business was also reported to have increased during the fourth quarter. An increase to US$2.50 average revenue per user from US$1.40 during the quarter was attributed to to the CRA Health acquisition. 

The Buy rating is retained and the target price decreases to $1.80 from $2.05. 

This report was published on April 27, 2021.

Target price is $1.80 Current Price is $1.25 Difference: $0.55
If VHT meets the Bell Potter target it will return approximately 44% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 5.49 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 22.76.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 4.38 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 28.56.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

WBC    WESTPAC BANKING CORPORATION

Banks - Overnight Price: $25.46

Goldman Sachs rates ((WBC)) as Buy (1) -

Due primarily to Westpac Banking's disclosure (on 26 April 2021) of notable items that will impact its first half FY21 result, Goldman Sachs has amended FY21, FY22, and FY23 earnings per share (EPS) forecasts by -4.2%, -3.1%, and -3.7% respectively.

While -$212m of the -$282m in 1H21 notable items were announced at Westpac's 1Q21 trading update, notable additional items include: additional provisions for customer refunds, payments, associated costs, and litigation provisions of -$220m, plus a write-down of capitalised software and other intangibles of -$115m. 

Then there are costs associated with ending the group’s relationship with IOOF Holdings ((IFL)) (-$56m, plus a write-down of goodwill relating to Lenders Mortgage Insurance of -$84m). 

Finally, there's an accounting loss on sale in Westpac Pacific, along with transaction costs and payments associated with divestments, (-$113m).

The broker does not view these changes as material, with the Buy remaining, and the target price increasing to $26.67 from $25.94.

The report was issued April 27, 2021

Target price is $26.67 Current Price is $25.46 Difference: $1.21
If WBC meets the Goldman Sachs target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $28.49, suggesting upside of 11.9%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 112.00 cents and EPS of 169.00 cents.
At the last closing share price the estimated dividend yield is 4.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 176.1, implying annual growth of 176.3%.
Current consensus DPS estimate is 116.0, implying a prospective dividend yield of 4.6%.
Current consensus EPS estimate suggests the PER is 14.5.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 131.00 cents and EPS of 178.00 cents.
At the last closing share price the estimated dividend yield is 5.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 180.3, implying annual growth of 2.4%.
Current consensus DPS estimate is 124.3, implying a prospective dividend yield of 4.9%.
Current consensus EPS estimate suggests the PER is 14.1.

Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources


Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

MEMBER LOGIN